Down the Drain

While the government continues to claim that its liquor privatization plan will not reduce revenues, a new report from the Saskatchewan Office of the Canadian Centre for Policy Alternatives thoroughly refutes those claims. Down the Drain: The Saskatchewan Government’s Costly Proposal for Liquor Retailing by David Campanella demonstrates why the government’s privatization plan will actually cost the province $115 million over the next five years should it be implemented.

As Mr. Campanella makes clear, the government’s proposal avoids mentioning the two critical aspects that make the proposal a major revenue drain for the SLGA and the province. One is that the government’s newly proposed mark-ups are actually reductions of roughly 25% - a sizeable cut that will impact the government’s main source of liquor revenue. The second is that the fragmentation of the distribution system and reduction in purchasing power of the SLGA will almost certainly increase wholesale costs, as has occurred in the heavily-privatized provinces of Alberta and British Columbia. If retail liquor prices are to be kept at roughly the same level, these two factors will squeeze the revenue going to the SLGA and ultimately public coffers.